High-flying CoElco Ltd., the Fountain Valley company that grew from an empty shell into an acquisition-fat conglomerate in the past year, has been grounded by twin investigations by the Securities and Exchange Commission and the National Assn. of Securities Dealers.

The inquiries are the first public showdown for the rapid-growth policies of company Chief Executive David Sterns, whose career has been linked to several troubled Southland companies, and could bring his takeover juggernaut to an abrupt end.

Sterns, 49, who acquired a controlling interest in CoElco one year ago when it had no assets or earnings, acknowledged last week that the SEC action has thrown a crimp in his plans: Because of questions raised about the firm's assets, he said, lenders have hesitated to do business with CoElco and he had to talk the firm's insurance company out of canceling its policy.

Perhaps more important, Sterns said the company will refrain from issuing any more common shares while the investigations are pending. Without having shares to swap, five of six pending acquisitions will likely be put on hold, the company said.

Until both watchdog groups complete their inquiries, CoElco's stock will not be quoted on the NASD's automated national market, though it can still be traded among brokers in the private over-the-counter market. Brokers still watching the stock said its market price has fallen 75% since a temporary SEC-imposed trading suspension was announced two weeks ago, and the volume trading has slowed to a trickle.

The tumbling stock price and SEC investigation are only Sterns' latest headaches. He also faces having to defend CoElco in a civil suit brought by one of its bankers, and he is hounded by lingering troubles of Resources International Ltd., the last Southland company he founded, which has fallen into financial ruin amid a flurry of lawsuits by angry creditors and investors.

Although Sterns has enemies who contend that he is a wheeler-dealer responsible for the loss of millions of dollars in investors' funds, he also has supporters who say that he is a knowledgeable businessman who has suffered un

justly from his association with failing firms.

Neither SEC nor NASD officials would discuss the details of their CoElco inquiries, but both agencies said they are generally concerned over the accuracy of financial information being disseminated by the company. More specifically, both said they are focusing their inquiries on the value of the company's assets.

Although an SEC 10-day trading suspension was lifted at midnight May 2, the Securities and Exchange Commission's "informal private investigation" will continue, according to the company's attorney.

Until that suspension, CoElco stock benefited from active trading. Two and a half weeks ago its stock sold for nearly 50 cents a share, up from only 1 cent a share when the company started offering its shares on the open market last July. But currently the stock is valued at 12 cents a share, said Jerry Rosen, a stock trader with Norbay Securities, a market maker and investment banker in New York.

Sterns, who says he is a certified public accountant, said he believes CoElco is at fault only for tardiness in meeting SEC deadlines to provide financial data. He said CoElco was late in complying with an SEC order to change its method of accounting for the company's acquisition last July of Western States Plywood Corp. of Santa Fe Springs. He said the SEC required CoElco's accounting to show that Western States now has voting control of CoElco.

11 Acquisitions

Western States is just one of 11 acquisitions that CoElco has completed over the last year. The acquired companies, scattered over Orange and Los Angeles counties, range from a manufacturer of building materials and components used in the assembly of recreational vehicles to a producer of laser entertainment.

The acquisitions were financed mostly by stock swaps and allowed CoElco to build its assets from zero to $13.2 million as of Feb 28.

Its earnings haven't kept the same pace.

Sterns said that for the third fiscal quarter ended Feb. 28, CoElco would report net income of $25,000. A year earlier the company was inactive, but in response to an SEC request, CoElco restated its prior results to reflect the operations of Western States Plywood. On that basis, CoElco had a $45,000 loss in last year's third quarter. Revenues for the quarter were $4.9 million, compared with $1.7 million a year earlier.

For the fiscal nine months, Sterns said, CoElco would report net income of $101,000 after accounting for a $557,000 loss from discontinued operations. A year earlier, restated net income was $89,000. Revenues increased to $9.4 million from $5.3 million the prior year.